[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3971 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3971

 To amend the Internal Revenue Code of 1986 to expand the permissible 
use of health savings accounts to include health insurance payments and 
 to increase the dollar limitation for contributions to health savings 
                   accounts, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 29, 2009

  Mr. Flake introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to expand the permissible 
use of health savings accounts to include health insurance payments and 
 to increase the dollar limitation for contributions to health savings 
                   accounts, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Health Savings 
Account Expansion Act of 2009''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, etc.
             TITLE I--EXPANSION OF HEALTH SAVINGS ACCOUNTS

Sec. 101. Repeal of high deductible health plan requirement.
Sec. 102. Health insurance may be purchased from account.
Sec. 103. Increase in dollar limitation.
Sec. 104. Effective date.
 TITLE II--TERMINATION OF EXISTING HEALTH-RELATED TAX PREFERENCES FOR 
                  MEDICAL COVERAGE, MEDICAL CARE, ETC

Sec. 201. Termination of existing health-related tax preferences for 
                            medical coverage, medical care, etc.
Sec. 202. Termination of employer deduction for health coverage.

             TITLE I--EXPANSION OF HEALTH SAVINGS ACCOUNTS

SEC. 101. REPEAL OF HIGH DEDUCTIBLE HEALTH PLAN REQUIREMENT.

    (a) In General.--Section 223 of the Internal Revenue Code of 1986 
is amended by striking subsection (c) and redesignating subsections (d) 
through (h) as subsections (c) through (g), respectively.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 223 of such Code is amended 
        to read as follows:
    ``(a) Deduction Allowed.--In the case of an individual, there shall 
be allowed as a deduction for a taxable year an amount equal to the 
aggregate amount paid in cash during such taxable year by or on behalf 
of such individual to a health savings account of such individual.''.
            (2) Subsection (b) of section 223 of such Code is amended 
        by striking paragraph (8).
            (3) Subparagraph (A) of section 223(c)(1) of the Internal 
        Revenue Code of 1986 (as redesignated by subsection (a)) is 
        amended--
                    (A) by striking ``subsection (f)(5)'' and inserting 
                ``subsection (e)(5)'', and
                    (B) in clause (ii)--
                            (i) by striking ``the sum of--'' and all 
                        that follows and inserting ``the dollar amount 
                        in effect under subsection (b)(1).''.
            (4) Section 223(f)(1) of such Code (as redesignated by 
        subsection (a)) is amended by striking ``Each dollar amount in 
        subsections (b)(2) and (c)(2)(A)'' and inserting ``In the case 
        of a taxable year beginning after December 31, 2010, each 
        dollar amount in subsection (b)(1)''.
            (5) Section 26(b)(U) of such Code is amended by striking 
        ``section 223(f)(4)'' and inserting ``section 223(e)(4)''.
            (6) Sections 35(g)(3), 220(f)(5)(A), 848(e)(1)(v), 
        4973(a)(5), and 6051(a)(12) of such Code are each amended by 
        striking ``section 223(d)'' each place it appears and inserting 
        ``section 223(c)''.
            (7) Section 106(d)(1) of such Code is amended--
                    (A) by striking ``who is an eligible individual (as 
                defined in section 223(c)(1))'', and
                    (B) by striking ``section 223(d)'' and inserting 
                ``section 223(c)''.
            (8) Section 408(d)(9) of such Code is amended--
                    (A) in subparagraph (A) by striking ``who is an 
                eligible individual (as defined in section 223(c)) 
                and'', and
                    (B) in subparagraph (C) by striking ``computed on 
                the basis of the type of coverage under the high 
                deductible health plan covering the individual at the 
                time of the qualified HSA funding distribution''.
            (9) Section 877A(g)(6) of such Code is amended by striking 
        ``223(f)(4)'' and inserting ``223(e)(4)''.
            (10) Section 4973(g) of such Code is amended--
                    (A) by striking ``section 223(d)'' and inserting 
                ``section 223(c)'',
                    (B) in paragraph (2), by striking ``section 
                223(f)(2)'' and inserting ``section 223(e)(2)'', and
                    (C) by striking ``section 223(f)(3)'' and inserting 
                ``section 223(e)(3)''.
            (11) Section 4975 of such Code is amended--
                    (A) in subsection (c)(6)--
                            (i) by striking ``section 223(d)'' and 
                        inserting ``section 223(c)'', and
                            (ii) by striking ``section 223(e)(2)'' and 
                        inserting ``section 223(d)(2)'', and
                    (B) in subsection (e)(1)(E), by striking ``section 
                223(d)'' and inserting ``section 223(c)''.
            (12) Section 6693(a)(2)(C) of such Code is amended by 
        striking ``section 223(h)'' and inserting ``section 223(g)''.

SEC. 102. HEALTH INSURANCE MAY BE PURCHASED FROM ACCOUNT.

    Paragraph (2) of section 223(d) of the Internal Revenue Code of 
1986 is amended to read as follows:
            ``(2) Qualified medical expenses.--The term `qualified 
        medical expenses' means, with respect to an account 
        beneficiary, amounts paid by such beneficiary for medical care 
        (as defined in section 213(d)) for such individual, the spouse 
        of such individual, and any dependent (as defined in section 
        152, determined without regard to subsections (b)(1), (b)(2), 
        and (d)(1)(B) thereof) of such individual, but only to the 
        extent such amounts are not compensated for by insurance or 
        otherwise.''.

SEC. 103. INCREASE IN DOLLAR LIMITATION.

    (a) In General.--Paragraph (1) of section 223(b) of the Internal 
Revenue Code of 1986 is amended by striking ``the sum of the monthly'' 
and all that follows through ``eligible individual'' and inserting 
``$8,000 ($16,000 in the case of a joint return)''.
    (b) Conforming Amendments.--
            (1) Subsection (b) of such Code is amended by striking 
        paragraphs (2), (3), and (5) and by redesignating paragraphs 
        (4), (6), and (7) as paragraphs (2), (3), and (4), 
        respectively.
            (2) Paragraph (2) of section 223(b) of such Code (as 
        redesignated by paragraph (1)) is amended by striking the last 
        sentence.
            (3) Paragraph (4) of section 223(b) of such Code (as 
        redesignated by paragraph (1)) is amended to read as follows:
            ``(4) Medicare eligible individuals.--The limitation under 
        this subsection for any taxable year with respect to an 
        individual shall--
                    ``(A) in the case of the first taxable year in 
                which such individual is entitled to benefits under 
                title XVIII of the Social Security Act, be the amount 
                which bears the same proportion to the amount in effect 
                under paragraph (1) with respect to such individual 
                as--
                            ``(i) the number of months in the taxable 
                        year during which such individual was not so 
                        entitled, bears
                            ``(ii) to 12, and
                    ``(B) be zero for any taxable year thereafter.''.
            (4) Subparagraph (B) of section 223(f)(1) of such Code (as 
        redesignated by section 101) is amended to read as follows:
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                such taxable year begins determined by substituting 
                `calendar year 2009' for `calendar year 1992'.''.

SEC. 104. EFFECTIVE DATE.

    The amendments made by this title shall apply to taxable years 
beginning after the date of the enactment of this Act.

 TITLE II--TERMINATION OF EXISTING HEALTH-RELATED TAX PREFERENCES FOR 
                  MEDICAL COVERAGE, MEDICAL CARE, ETC

SEC. 201. TERMINATION OF EXISTING HEALTH-RELATED TAX PREFERENCES FOR 
              MEDICAL COVERAGE, MEDICAL CARE, ETC.

    (a) Amounts Received Under Accident and Health Plans.--Section 105 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following:
    ``(k) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2009.''.
    (b) Contributions by Employer to Accident and Health Plans.--
            (1) In general.--Section 106 of such Code is amended by 
        adding at the end the following:
    ``(f) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2009.''.
            (2) Conforming amendment.--Subparagraph (B) of section 
        223(b)(2) of such Code, as amended by section 103 of this Act, 
        is amended by striking ``which is excludable from the 
        taxpayer's gross income for such taxable year under section 
        106(d)'' and inserting ``which would have been excludable from 
        the taxpayer's gross income for such taxable year under section 
        106(d) (determined as if such section was in effect on the day 
        before the date of enactment of the Health Savings Account 
        Expansion Act of 2009)''.
    (c) Special Rules for Health Insurance Costs of Self-Employed 
Individuals.--Paragraph (1) of section 162(l) of such Code is amended 
by adding at the end the following new subparagraph:
                    ``(C) Years after 2009.--In the case of any taxable 
                year beginning in a calendar year after 2009, the 
                applicable percentage shall be zero.''.
    (d) Medical, Dental, etc., Expenses.--Section 213 of such Code is 
amended by adding at the end the following:
    ``(f) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2009.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 202. TERMINATION OF EMPLOYER DEDUCTION FOR HEALTH COVERAGE.

    (a) In General.--Section 162 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (q) as subsection (r) and by 
inserting after subsection (p) the following new subsection:
    ``(q) Denial of Deduction for Medical Care.--No deduction shall be 
allowed under this chapter to an employer for any amount paid or 
incurred with respect to an employee, his spouse, and dependents during 
the taxable year--
            ``(1) for insurance which constitutes medical care,
            ``(2) under a health flexible spending arrangement or 
        health reimbursement arrangement,
            ``(3) to an Archer MSA or a health savings account, or
            ``(4) under any other arrangement under which the employer 
        provides medical care, directly or indirectly, to the employee, 
        spouse, or dependent.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2009.
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